Last week’s midterm elections showed that health reform is a top priority for voters—and will likely remain so through the 2020 presidential election. This will put a premium on candidates’ proposals to improve health care affordability and protect people with pre-existing conditions. Such proposals, whose formulation starts now, matter: two-thirds of campaign promises from Presidents Nixon through Obama were kept.

President Trump and Republican contenders will likely circle around a proposal to repeal Affordable Care Act (ACA) funding and replace it with a state-based block grant or state innovation approach (originally proposed in 2017 as the Graham–Cassidy–Heller–Johnson amendment). Democratic challengers will likely defend the ACA and support expansion of some Medicare-type public-plan option.

To inform decision making within these diametrically opposed approaches, The Century Foundation is leading a project called “Getting Ready for Health Reform 2020,” funded by the Commonwealth Fund. Today, two of the project’s articles were published in Health Affairs. They explore the choices for presidential candidates across and within these frameworks, and are summarized here.

Democratic Map: Which Road to Take

For Democrats, the challenge is picking from an array of proposals. Sherry Glied and I offer tips in our article, “How Democratic Candidates for the Presidency in 2020 Could Choose among Public Health Insurance Plans.” We begin by explaining the impurity of the current system: private plans are subject to government policy while public plans have private plans in their midst—including Medicare. Against this backdrop, we sort proposals into three buckets (see Table 1): proposals that (1) inject public plan tools into private plans; (2) offer a public plan alongside private plans; or (3) replace private plans with a public plan. A key determinant in candidates’ selection of a particular proposal is what health system problem drives the candidate toward a public plan expansion.

For Democrats, the question is this: Is your highest priority to:

  1. Reduce complexity and profits in the health care system? Replacing private insurance with a single public plan like Medicare for All proposals would, compared to other approaches, yield the greatest amount of simplification and administrative costs in the health system. In particular, it would eliminate or drastically reduce the role of insurers and investors while giving the federal government nearly complete control over provider payments. However, under a single-payer plan, now-invisible costs would be transformed into large and visible new federal taxes which would be a major challenge to enact and sustain in any political environment. Eliminating fragmentation would ensure universal coverage, but it would also mean changing the insurance of more than 175 million privately insured Americans, many of whom are quite satisfied with their current arrangements.
  2. Guarantee an affordable health plan? Proposals short of a single public plan could ensure individuals, and perhaps employers as well, have a secure public plan option alongside private options (Medicare Part E, for instance). This approach would address the fear of not having access to affordable health insurance. While politically attractive, choice models are technically and operationally difficult. For example, the public plan’s use of low Medicare provider payment rates might generate steep differentials between public and private plan premiums that could tilt enrollment, driving private plans out of the system and potentially driving providers out of existing public programs.
  3. Solve severe problems for certain areas or groups? A new public-plan option could be targeted to specific people or places where the market has failed. A place-based approach (such as the Medicare X-Choice Act) is attractive in part because of industry consolidation and natural monopolies for some health care providers and insurance markets. Providing an affordable health plan where one is currently lacking is hard to oppose. However, doing so may drive out private insurers and make the health system more, rather than less, complex.
  4. Lower prices? Some proposals suggest allowing Medicare-based provider payment rates to be used broadly or in a targeted way: in shortage or high-cost areas (as just described), for high-cost claims through reinsurance, for certain services such as prescription drugs, or for for out-of-network claims (for example, the Reducing Costs for Out-of-Network Services Act). This approach harnesses some of the benefits of a public plan without taking on the work of creating and running such a plan. The challenge for extending the use of public prices—whether as a stand-alone measure or within an optional or single-payer public plan—is getting the prices right. Health care providers could decline to participate in Medicare should too many patients get covered at its “too low” rates, which would limit access to care for Medicare beneficiaries.
  5. Change the system all at once? A candidate that embraces Medicare for All as the ultimate goal may choose to take cautious steps toward it. Such steps could include offering a public plan to a subset of people or places as a proof of concept that could support further expansions (for instance, the Medicare Buy-In at 55 Act). That said, as the history of Medicare suggests, what may seem at the outset to be a successful first step on a progression may turn out to be the policy in place for years, if not decades, given the challenges of enacting health reform legislation.

In short, Democratic candidates can “choose your own adventure” when it comes to Medicare-like public plan proposals, based on their preferences and priorities.

Republican Map: Which Potholes to Avoid

Republican candidates likely face a different type of health reform decision: how to refine a single approach rather than select from a set of related proposals. Lanhee Chen, former advisor to candidate Mitt Romney in his 2012 bid for the presidency, offers some suggestions in his article, “Getting Ready for Health Reform 2020: Republicans’ Options for Improving Upon the State Innovation Approach.” He first describes conservatives’ disagreement over universal coverage, tax policy, the best approach to lowering health care costs, and the efficacy of the Medicaid program. Then, he focuses on conservatives’ common-denominator approach: state innovation. He also suggests how Republican candidates can avoid specific criticisms such as those raised in a Congressional Budget Office analysis of the prototype proposal, the 2017 Graham–Cassidy–Heller–Johnson amendment.

For Republicans, the question is this: Is your concern about the state innovation approach:

  1. Coverage affordability and accessibility? The original state innovation approach required half of state block grant funds to be used for health care for people with incomes from 50 to 300 percent of the federal poverty level. Other guardrails for the use of funds could be added to yield more affordable and accessible coverage. For example, the proposal could require states to use some fraction of the block grant funding to lower premiums, subsidize reduced cost sharing for low-income people in private plans, and support risk-mitigation mechanisms such as reinsurance or high-risk pools for the most expensive enrollees.
  2. How the amount of the state block grant is initially set? The 2017 proposal based the first-year state-specific amount on previous federal spending in the state on the ACA’s Medicaid expansion and Health Insurance Marketplaces, adjusted for the number of state residents with incomes of 50 to 138 percent of the federal poverty line. This low-income resident factor could be changed to those with income of 50 to 300 percent of the federal poverty line to address a concern that this formula does not capture the population potentially being served.
  3. Adjustments to the state block grant over time? Health care cost growth varies regionally and is driven by numerous, complicated factors. To help maintain the sufficiency of the block grant to meet residents’ health needs over time, the state innovation approach could add adjustments for public health emergencies, natural disasters, and economic downturns. It could also include performance-based bonuses to encourage states to meet targets for coverage or cost reduction.
  4. Inclusion of non-ACA Medicaid? The 2017 legislative proposal would have gone beyond the ACA to cap, on a per-enrollee basis, most of the Medicaid program. This proposal added complexity as well as political opposition. To avoid this, candidates could narrow their version of a state innovation proposal to the ACA’s Medicaid expansion and Marketplace-subsidized populations.
  5. Exclusion of ACA insurance reforms? The midterm elections made vividly clear that the public does not want politicians to repeal the ACA’s pre-existing condition protections. The original state innovation bill would give states the flexibility to do so. Preserving, at a minimum, the ACA’s prohibitions on pre-existing condition exclusions and denials of coverage might be a political necessity for candidates for the presidency from both parties.
  6. Limit of financial assistance to Marketplace plans? Conservatives have chafed at some repeal-and-replace proposals’ limitation of premium tax credits to health plans sold through the Marketplaces. Republican presidential candidates may choose, instead, to broaden financial assistance to enrollees in plans sold outside of the Marketplaces as well as to other types of health plans, such as employer and short-term limited duration plans. Doing so, however, raises logistical challenges for states such as how to provide assistance in a timely way, especially residents who have low income and cannot afford premiums on their own.
  7. Line between Medicaid and state block grant coverage? One problem in the current system, as well as in the original state innovation proposal, is the challenge of maintaining continuous coverage for low-income people whose income fluctuates. Their eligibility can switch from Medicaid to subsidized private plans and back again within a given year. A Republican candidate could address this concern by allowing or requiring state Medicaid programs to buy non-elderly, non-disabled adults and children on Medicaid into private plans instead of covering them through Medicaid.

These concerns are expressed by politicians at different points on the conservative spectrum. This underscores how, even within the state innovation approach, the prevailing Republican candidate’s choices in designing a health platform will influence how many Americans get what type of health care.

More Today and to Come

Our project to prepare for the great health care debate of 2020 extends beyond these two articles. Also released today is an issue brief entitled “Moving Toward High-Value Health Care: Integrating Delivery System Reform into 2020 Policy Proposals.” Meena Seshamani and Aditi Sen suggest how candidates of all both political persuasions could improve information sharing, promote innovation, and align efforts to use value-based purchasing strategies across public and private payers of health care. Issue briefs in the coming months will explore the role of states versus the federal government and offer concrete suggestions for candidates on how to structure consumer choices. Stay tuned.

Comparison of Public-Plan Legislative Proposals
Proposal Financing Eligibility Provider and Insurer Rates Choice of Plans
Public Plan Elements
Consumer Health Insurance Protection Act (S.  2582) Premiums (eligible for ACA tax credits) People in private plans Increases limits on private plan profits (medical loss ratios) No:

Only private plans

Reducing Costs for Out-of-Network Services Act (S. 3541) Premiums (eligible for ACA tax credits) People in private plans Caps provider payment at percent of private rates or 125% of Medicare rates No:

Only private plans

Public Plan Choice
Medicare Part E (S.  2708, H.R. 6117) Premiums (eligible for ACA tax credits) All not eligible for Medicare, Medicaid Between Medicare and average private rates Yes:

Public or private plan

Medicaid Option (S.  2001, H.R. 4129) Premiums (eligible for ACA tax credits) All not eligible for Medicare, Medicaid Medicaid rates; Medicare rates for primary care Yes:

Public or private plan

Public Health Insurance Option (S.  194, H.R. 635) Premiums (eligible for ACA tax credits) People with individual, small business coverage Between Medicare and average private rates Yes:

Public or private plan

Medicare X (S.  1970, H.R. 4094) Premiums (eligible for ACA tax credits) People with individual, small business coverage, starting in underserved areas Medicare rates with higher amounts in rural areas Yes:

Public or private plan

Medicare Buy-In at 55 (S.  1742, H.R. 3748) Premiums (eligible for ACA tax credits) People ages 50 or 55–64 not eligible for Medicare Medicare rates Yes:

Public or private plan

Single Public Plan
Medicare for All (H.R.  676) Taxes All Set by a board No:

All enrolled in Medicare

Medicare for All (S.  1804) Taxes All after transition Based on Medicare No:

All enrolled in Medicare after transition

SOURCE: The Century Foundation, based on Glied and Lambrew, Health Affairs Web Exclusive, November 16, 2018